Niche company – unable to resolve combined problem of paying off liabilities and funding pay off of older Director (and usual tax and remuneration issues)
This is a tale of two co-directors. The young director of niche company WTR Ltd. had to find a way to pay off an older director. The directors had a verbal agreement on the amount. It was an enormous sum of money, and the company had nowhere near enough funds in the bank to make the payment. To make matters worse, WTR had several outstanding liabilities, including directors’ loans and corporation taxes.
The young director proposed saving up the money to pay his co-director over a 3-to-5-year period.
A friend of the young director was a client of Pareto Lawrence and recommended that the young director consult with Pareto about his situation.
Pareto’s advisers proposed plans that would save WTR money in taxes and cash flow and that would raise the value of the company. This was great news for the young director, but it also presented a new problem. Pareto advised that the verbal agreement with the co-director was not solid. As the value of the company increased, the older director was likely to try to negotiate a higher price.
The solution, Pareto advised, was to get the co-director to commit to an agreement before the younger director started implementing the plans that would increase the company’s worth. Pareto commissioned a firm of solicitors, which got the older director to agree to a payment based on a fixed value for his shares. Once the papers were signed, the rest of the plans were quickly put into place.
The goal of Pareto’s advisers is not only to solve companies’ problems and increase the wealth of businesses and their owners, but also to make the experience pleasant for their clients. While Pareto’s plans for WTR involved making changes in some of the familiar ways the company operated, Pareto’s policy of working in stages meant the director always fully understood what was going on. The client appreciated that it was done “step by step, in nice easy chunks.”
Pareto’s strategies enabled the young director to gain control of WTR in only seven months, instead of the three to four years he originally anticipated. The plans enabled him to successfully deal with the company’s loans and taxes, initiate profitable new strategies, and put the company on a solid footing for the future.
If you are in a similar situation, we would like to discuss how our strategic planning can resolve your issues and increase your company’s value. Call us for a free no-obligation meeting on 01189 347 920.